The Services sector continues to lead the market higher, being the top performer over the last three months and the last week. With the market continuing to push upward, a strong sector is the place to be and the large assortment of industries that fall under the Services sector means there are a lot of stocks to choose from. The stocks below are from various industries, all large capitalization and have made a new high (or are about to). As long as the market, represented by an index such as the S&P 500, continues higher these stocks are likely to do well, potentially outperforming.

Comcast Corporation (Nasdaq:CMCSA) which has had a great year, but was been moving predominately sideways since the middle of February, created a new 52-week high on May 1. This can be interpreted as a sign of relative strength as the Nasdaq 100 index remains slightly below its respective 52-week high. A breakout from the sideways consolidation provides targets of $32.30 and $33.30; the breakout is supported by a pick up in volume on May 1. On declines the price has stalled between $28.85 and $28.30, creating a support area. $28.30 is significant as it was the February 15 intra-day low; the day the stock gapped higher by more than a dollar. If $28.30 is penetrated the gap could be closed as the stock heads to retest support at $27.

SEE:The Anatomy Of Trading Breakouts

Canadian Pacific Railway (NYSE:CP) is also looking to breakout to the upside, but currently remains below the 52-week high of $79.91 (March 27). If the 52-week high is penetrated, ideally on rising volume, the target for the move is $88. The low of this consolidation pattern, which began in early February, is $71.67. A drop below that level signals a potential downside breakout and a potential test of primary support in the $65 area.

Nordstrom Inc. (NYSE:JWN) had a slower start to year than many other stocks, but moved higher throughout February and March. During April the stock consolidated below the 52-week high at $56.75 and above the April 10 low at $53.20. In 2011 the stock attempted to break the $53 on several occasions but was unable to hold above the level. A move back below $53 could start to unravel the upward progress this stock has made, sending it back toward $50. On the other hand, a rise above $56.75 is a positive signal that support has held and a further advance is forthcoming. The target for such a move is $60 to $60.30.

SEE: Interpreting Support And Resistance Zones

Lowe's Companies (NYSE:LOW) has been in an uptrend since August, 2011. During the latter part of that advance Lowe's has been well supported at $30 and more recently at $30.90. Support stepping higher indicates buying pressure is building once again and the 52-week high ($32.29) could be tested shortly. If that high is penetrated, it indicates a move to $34 to $34.25. Of concern though is the rather steep decline in volume the stock has seen since early March. While the push higher toward $34 could quite possibly occur on anemic volume, a marked up tick in volume would confirm the move. A drop back below $30 is at least short-term bearish and likely to trigger selling into support between $28 and $27.70.

SEE: Support & Resistance Basics

The Bottom Line
These Services sector stocks have already had a good year and further upside potential remains in play. These are not "home run" stocks but rather high capitalization stocks from various industries which are breakout candidates. The risk can be easily established based on well defined support, and these risk levels should be adhered to. Since these stocks have been in consolidations, a drop below support is short-term bearish. Ideally volume should rise on upside breakouts.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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